How the ATM Affects the Way We Pay

22 Pages Posted: 26 Feb 2019

See all articles by Oz Shy

Oz Shy

Federal Reserve Banks - Federal Reserve Bank of Atlanta

Multiple version iconThere are 2 versions of this paper

Date Written: 2019-02-01

Abstract

Cash users withdraw money from automated teller machines (ATMs) to finance cash payments. However, most ATMs in the United States dispense only multiples of $20 bills. The paper first constructs a consumer's optimization model showing how the precise denomination of dollar bills available from ATMs affects consumers' decision whether to pay with cash or with (plastic) cards. Then, the paper uses various statistical techniques to conduct empirical analyses of consumers who choose to pay cash for transactions below a certain threshold payment amount and pay with cards for transactions exceeding that threshold.

Keywords: currency denomination, automated teller machines, ATM, consumer payment choice, payment methods, point of sale

JEL Classification: D9, E42

Suggested Citation

Shy, Oz, How the ATM Affects the Way We Pay (2019-02-01). FRB Atlanta Working Paper No. 2019-2. Available at SSRN: https://ssrn.com/abstract=3342670 or http://dx.doi.org/10.29338/wp2019-02

Oz Shy (Contact Author)

Federal Reserve Banks - Federal Reserve Bank of Atlanta ( email )

1000 Peachtree Street N.E.
Atlanta, GA 30309-4470
United States

HOME PAGE: http://https://www.frbatlanta.org/research/economists/shy-oz.aspx

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